The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the reassessment proceedings initiated against M/s Soham Techno Cast, holding that the income tax department does not have the jurisdiction to reopen the assessment because the alleged escaped income was less than the statutory threshold of ₹50 lakh prescribed under Section 149(1)(b) of the Income Tax Act.
The Tribunal permitted the taxpayer’s appeal, stating that the reassessment notice issued after the three-year limitation period was not lawfully sustainable.
The issue is pertinent to the AY 2017-18, where the taxpayer had originally declared an income of Rs 26,220. In the reassessment proceedings, the assessing officer alleged that cash deposits of Rs 34.30 lakh, including ₹25.30 lakh deposited during the demonetisation period, were unexplained.
As the taxpayer allegedly did not explain the source of the deposit, the amount was deemed unexplained money u/s 69A and taxed u/s 115BBE of the Income Tax Act.
The taxpayer contested the reassessment’s validity before the tribunal. The department, however, issued notices under sections 148 and 148A after the decision of the Supreme Court in Union of India v. Ashish Agarwal; the reassessment could not survive because it was started post the lapse of three years from the end of the pertinent assessment year.
The taxpayer claimed that the escaped income alleged by the department was merely Rs 34.30 lakh, which is less than the Rs 50 lakh threshold needed for invoking the extended limitation period of up to 10 years u/s 149(1)(b).
After reviewing the statutory provisions, the Tribunal noted that Section 149 allows for reopening beyond three years only if the Assessing Officer has evidence indicating escaped income of ₹50 lakh or more in specified forms. In this case, however, the alleged escaped income amounted to only ₹34.30 lakh. Therefore, the necessary condition for invoking the extended limitation period was not met.
The Tribunal also referenced the Delhi High Court’s ruling in Ganesh Dass Khanna v. ITO, which stated that reassessment notices issued after three years cannot be upheld if the alleged escaped income is less than ₹50 lakh. Following this principle, the Bench concluded that the reassessment notice dated July 15, 2022, was barred by limitation and issued without jurisdiction.
As a result, the ITAT annulled the reassessment proceedings entirely. Since the reassessment was deemed invalid, the Tribunal noted that all issues related to the addition u/s 69A, taxation u/s 115BBE, and other consequential matters became irrelevant and did not need further consideration. Consequently, the assessee’s appeal was allowed.
| Case Title | M/s Soham Techno Cast vs Income Tax Officer |
| Case No. | ITA No. 832/RJT/2025 |
| For Petitioner | Shri Kalpesh Doshi, Ld. AR |
| For Respondent | Shri Abhimanyu Singh Yadav, Ld. Sr. DR |
| Rajkot ITAT | Read Order |
